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Edward Snowden’s big reveal about the NSA invading the privacy of individuals has thrown up a number of disturbing issues, not least of which is the feeling among ordinary people like us that Big Brother is really watching.

It is a violation of human rights to privacy, undoubtedly, but it also reveals the scale of control that is exercised over other nations and people. And, as this early discussion by Bloomberg contributing editor Richard Falkenroth shows the fallout of the reveals has been big even in the sphere of international relations and business.

Impact on Businesses

The discovery that the United States government has its eyes on you can have all sorts of repercussions on all types of businesses, small or large, in the US and across the world.

1. Rising Doubt: Business Data Is Not Safe With The Government

When you share important business data on the US government’s data hubs, you have to trust that these centers will keep your data safe. This data can be anything from website passwords, proprietary product recipes, trade secrets or billion dollars’ worth of research.

Some businesses spend a lot of money to protect their information from the prying eyes of competitors.

US tech companies like Apple, Yahoo and Google lead the world’s technology industries and thus far, have had the best security systems in place to protect the confidentiality of clients and users in their internal networks.

But the NSA leaks have made it clear that governments are constantly spying on each other and hacking into each others’ computers. If even Yahoo and Google servers were not safe from the US government’s surveillance teams, this means that your billion dollars’ worth of research can easily be accessed by international competitors if your government’s systems are hacked into.

The sense of the vulnerability of data shared on US data centers is bound to create a sense of doubt regarding whether you can trust the government to keep your data confidential and safe from global competitors.

There is certainly reason enough for such doubts. If a ‘high school dropout’ like Edward Snowden working alone was able to gain access to sensitive and top secret information, it is a foregone conclusion that your data is not safe from far more skilled hackers across the world. What does this mean for the security of your data in the future?

2. Growing Mistrust Of US Businesses and Tech Companies

The hacking of US tech and Internet giants has also revealed a web of lies that can have a great negative impact on the business world. These companies have claimed that they were not aware of the government’s surveillance activities, but later went on to retract their statements by saying that they were under orders to reveal millions of records from their internal servers on a daily basis. This has led to a growing mistrust among people of US tech companies. While that may not impact the regular Windows user or iPhone owner, if other countries are becoming vocal against the US tech industry, it becomes a big issue.

Cisco’s revenues have slumped as a result of the NSA leaks. The company says that ever since the leaks, orders in China and from other overseas customers have plummeted. Shareholders are also expressing their great discontent, with one IBMshareholder suing the company for failing to disclose the risks of cooperating with NSA’s spy program. Other Silicon Valley companies like AT&T and Verizon are also facing their shareholders’ wrath with investors similarly filing lawsuits against them.

3. Businesses Moving Away From Data Centers Ruled By US Laws

When you store data on a global server online, the laws of the location of the server apply rather than the laws of your country of residence. Cloud storage for frequent business travelers has been a much-lauded innovation. The idea behind it was to reduce the risk that business travelers face when they carry important data on hard drives that they are at the risk of losing during travel.

But more and more people are becoming wary of US data centers for cloud storage, because it is US laws that apply to data stored on such servers. As a result, companies like MacquarieTelecom are providing data storage in locations other than the US. The Australian government is a big client of the company’s local data centers which hope to help reduce cyber attacks against the government’s systems. More such companies are flourishing to meet the greater demand for cloud storage in locations outside of the US.

This MT’s video tries to depict current issue:

So, are the NSA leaks bad for business?

Yes. The fallout of the leaks is unfolding as we speak. It is clear that US businesses are suffering from a lack of trust, not only from customers but also from shareholders. The importance of trust in business is unarguable.

And global businesses that depend on US tech companies have also been losing out as a result. Since they can no longer trust the safety of their data, they have to look for alternate solutions. But there aren’t many of these yet, with US tech companies leading the field of security solutions.

And it is only a matter of time before smaller companies feel the trickle-down effect of the leaks. Businesses that have been spending loads of money to get their data secured are going to realize that there is little point in doing so if all of it ends up on a government hub that puts it beyond their control. The very idea of data security in our global world is at risk today.

According to a Forrester Research analyst, if something is not done to restore confidence in data handling, the US technology industry could suffer losses of $180 billion by 2016.

Add to that the fact that we are living in an increasingly connected world and like me, ordinary people are starting to wonder how private our social media interactions really are. The media has not been laudatory of Edward Snowden, but it is clear to a layman like me that the powers he is working for are the monsters here.

One disturbing question that clearly arises from Snowden’s role in the whole fiasco is how was a man who was so unqualified allowed access to such sensitive information?

Just like the fashion industry, the information technology industry moves in cycles with trends coming and going and then returning with a bang.

Taking a look at how things stand for cloud computing right now, it seems that the latter will hit that cycle very soon and go out of fashion faster than a speeding bullet.

A lot of the leaked information on the internet has opened the eyes of Americans and investors in US cloud services, making them aware of the fact that all of their important and sensitive data is actually being accessed by the NSA at their own whim.

This means that one cannot entrust classified and very important data about their company or organization to a cloud service provider, without the NSA having full access to it.

The PRISM and NSA break out has exposed the fact that data security is in fact a big lie and even though it was something that some have seen it coming for a very long time, it caught many individuals by surprise.

At the same time the news came out, it also raised some questions across the C level in the enterprise as to whether they would still consider investing in a cloud strategy or not.

If European cloud customers cannot trust the United States government, then maybe they won’t trust U.S. cloud providers either.

One morning, an exchange with an industry analyst revealed that more than 100 clients believe that the United States Government has signed the bill of death for every cloud service provider in the country, aspect which is extremely concerning, due to the fact that the losses projected are of more than 30 billion dollars.

On top of that, when hearing the news, many individuals and companies have put their plans on hold, because they don’t really want anyone else but them having access to their priceless information, on a business and personal level.

Snowden maybe did know what he’d cause when he let his mouth loose, but he certainly wasn’t aware of how much of an impact it would make.

Now there are 2 articles that have been written days of each other which continue to add more wood to the fire.

The ITIF came out to say that because of the fears regarding security and data privacy, the cloud computing industry will take a hit of around 36 billion dollars in the next 3 years and it’s all because of PRISM.

However, according to a Forrester analyst, this estimation was very modest. According to the info he published on his blog, he revealed that the cloud computing vendors should be ready to gulp a loss of approximately 180 billion dollars.

But the fact is that it’s not only the cloud computing industry that needs to put up with these near-death experiences, because third party encryption and security services are walking the plank as well.

Just this week 2 major E-mail encryption services, Silent Circle and Lavabit respectively, were forced to shut down due to the spying done by the NSA. In order to protect their privacy, Silent Circle informed their customers that it has killed off Silent Mail.

It seems that it’s very comfortable for such companies to close their own doors than actually compromise their very own values and risk user privacy and data. Because of it, it also raises the question of the worthiness of encryption services, given the fact that the US Government can just knock on their doors and request information to be handed over.

The M2M

So where are all of these people going to go now? Back to on-premise?
Or will they just continue using the cloud services like nothing even happened?
Maybe they could take on the path of Hybrid cloud?

It seems that vendors who advocate a hybrid strategy and have a core strength in on-premise software, this is the best time to start shouting about it.

Below there are some vital considerations:

Don’t forget that cloud developers are a strength.

No one should ignore the importance of cloud-cloud integration.

A cloud hybrid strategy should be chosen to fit your business and not vice versa.

Be aware of where your servers are and also of the data protection laws.

Carefully read the cloud contract to find out who’s responsible for your data.

Use your personal encryption rather than that of a third party company.

Key take-always from the report:

Based on sources that have been cited in the report, the global enterprise public cloud computing market will be a 207 billion dollars industry by 2016.

Between 2012 and 2016, worldwide spending for CC technology is expected to grow by as much as 100%, while according to the report, in the same period of time the Information Technology market will only grow by 3%.

Of the 13,5 billion dollars in 2011 investments that were made by cloud computing service providers, 41,6% or 5,6 billion dollars came from companies outside N. America.

The Information Technology Investment Fund managed to complete 2 forecast scenarios, with the first predicting a reduction of 20% in foreign market share, and constant market share growth domestically.

On the other hand, the second scenario presumes a 10% reduction in foreign market share to Asian and European competitors and 0% loss of current projected market share domestically.

It seems that the current situation is not stacking up well for cloud providers in the United States, but just like the fashion industry, it could just be a trend that will come and go and then come back again with a bang. However, with cloud, this is going to be a thunderclap.

People are advised to apply some intelligence, ignore the scaremongering and just watch the skies.